Volkswagen New Zealand's general manager on why the emissions scandal was the best thing to happen to the brand

There’s nothing like a global scandal to shake a company to its very foundations. Volkswagen New Zealand’s general manager Tom Ruddenklau shares what the New Zealand arm of the car dealer has learnt from operating in a crisis, and how it got to be in a position where it is now stronger and better performing than ever.

It’s been over a year since news broke about Volkswagen’s emissions scandal. When it broke, Ruddenklau didn’t know what was going on until a reporter rang him asking for comment.

He was shocked and disappointed, but he spurred into action in the face of a crisis. He made sure that if the scandal was going to define the company going forward, the New Zealand team would help shape that definition.

Ahead of the Insight Story event, we sat down with Ruddenklau and picked his brains on what he’s learnt from the whole experience.

Idealog: It’s been 18 months since the Volkswagen emissions scandal broke. What has the fall out from that been like? Has there been long-term effects felt from it you’re still feeling to this day?

It’s been the best thing that’s ever happened to our business. We’ve never had as stronger customer satisfaction, staff engagement, sales channel productivity and confidence, ever - and a lot of it is because of what we learned managing through that crisis. The customer became the lifeblood and genuinely at the centre of everything we do. The option for prioitising time for what was important for the customer was removed. It changed how we launched vehicles, it changed how we trained our sales force, it changed how we listened to our customers and we genuinely gave them a physical seat at the table when having discussions.

Because your performance was down to a relationship, the other big part that was important was the confidence of our people. We learnt that communication is vital, but it must be inside out. It must start at the coal face, because that’s where a relationship is made or lost. That’s what was under the most pressure every day. The mechanics, the receptionists and the people booking in services needed to be confident, and for them to be confident they need to be informed. We needed to show them due respect. We got in the trenches and we listened to the people that would ultimately define and fulfill our brand promise. Again, it’s simple if you stand back and look at it: if your people aren’t confident, you’re not going to get anywhere. Because there was focus, that then became purpose, and when people have purpose and they know that they count and they know what they do makes a difference, they get immense satisfaction. It drives them to want to be better, and to genuinely want to do everything for the customer.

As a result, our staff turnover dropped and our staff engagement went up and customer engagement went up. It was and it has been fantastic. Oddly enough, my greatest fear is now how we perform when we’re not under immense pressure that we were in. Pressure either makes diamonds or breaks glass.

Often the focus of a crisis is on the outwards reputation of a company, but not so much the internal workings and how you manage the emotions of your employees. How significant was the loss of pride people felt about working for Volkswagen?

It started with me, and I was really upset and disappointed. My people had been let down and they were so passionate about this brand. Restoring pride comes down to ensuring that they know they matter - that’s why they’ve got to have an inside out set of guiding principles before you communicate externally. Your team should know what’s going on, they shouldn’t have to read about it somewhere else. Every morning at nine o’clock the team would gather and say, “This is what we’re doing today, this is what we know, this is what we don’t know. This is what we’re going to communicate. Any ideas, thoughts? Right, off we go.”

The other thing is the team and everyone associated with the brand, including customers, were for the first time forced to make a decision and have an opinion around what they thought about it. What did they think about what had gone on, and what were they going to do? Were they going to jump ship, or were they going to rebuild? We purposefully asked the question, ‘Do you still have belief and do you still want to be involved? If you don’t, we completely understand. We’ll help you.’ It’s like a customer, if they’d completely lost belief I’d say ‘That’s completely fine, what other vehicle are you interested in? Great, I know the guy that runs that business, I’ll give him a call and see if he can look after you.’

If the question’s asked, people have to make a decision and then they stick to it. We were fortunate we asked that question very early on, and then people got committed and there was a real sense of purpose. Everyone knows their role. In a crisis, you don’t say ‘You do this and you do that’. People know where each other’s strengths are. You see this natural talent that’s been sitting there that hasn’t been activated then in a time of crisis, real capability comes to the surface. It was really enlightening to see the true capability of the team and probably a really big lesson for me, too. Why did it have to take a crisis for me to see it? Imagine how powerful it had been if it had come to the surface earlier.

How'd you go about customer relations and communications during that time?

The first thing and the best thing to do is to talk to them. Face to face or on the phone, you’ve got to be accessible and responsive and you’ve got to be honest and genuine. If you don’t know the answer, you have to tell them. I’m across every customer inquiry and complaint - the staff know it’s important to me, which preserves the focus on putting the customer first.

It’s interesting that if you took this situation out of context and you were dealing with a crisis with a friend, all this sort of advice would be straightforward: Be genuine, be honest, talk face-to-face, but it seems that when it’s in a business context, companies sometimes lose sight of that.

Especially when you’ve got an emotive brand like Volkswagen - a car says so much about a person’s aspirations, personality and value set. Why not approach it as how you would approach it with a good mate? I don’t think the excuse of business is good enough to not be upfront, to not be straightforward in your communications. In fact, it doesn’t even have to pertain to an emotive brand to do that. People should deal with people. The human animal has a whole lot of sensors in how we operate, and we still really value analogue communication and being upfront and honest.

What’s been the focus since then? What kind of efforts have you made to move onwards and upwards?

Our focus has been on two things: quality of business and being true to our brand DNA. So, we are a brand that sits in the middle of premium and mainstream. We have Volkswagen Golfs that are the same price as Toyota Corollas and BMWs, and we sell good volumes of both. In the past, I think we’ve been trying to be something were not and trying to chase too much volume. We’ve returned to our core DNA and tried to make sure that the brand continues to be iconic and special.

We’re also ensuring that we focus on quality of business because what’s easy to get is easy to lose, so if we chase too much volume, we haven’t got sincerity in our relationship with customers. It’s been a big lesson: you can achieve more actually by doing a little bit less.

People forgive, but don't forget, and that incident will be something that is associated with the brand for years to come. What approach do you take long-term to make sure that mistake doesn’t define you?

Well in an odd, perverse sort of way, it has defined us. It’s taught us a lot about what’s important in business. It’s an incredibly harsh lesson and its made us realise that what’s important in business is right under our nose. It’s really easy to complicate it. I probably wouldn’t recommend as a course of action to learn, it’s not for everyone but you can’t avoid it. There’s commentary around the world and litigation, but you’ve got a choice when these things happen. When it happened, I sat down and wrote an article through the eyes of a customer about what I wanted the outcome to be in 12 month’s time. I got the team together and said, ‘This can define us, so what do we want that definition to be?’ And I said ‘I want to grow by 10 percent off the back of this,’ almost as a challenge to the team, as in this can be a defining chapter to Volkswagen’s journey in New Zealand.

It boils down to your mindset and how you approach it, if you think its going to be shit and it’s going to destroy your brand, you know what? It probably will. If you decide it’s going to be a defining chapter and that the team is going to come together and navigate through the biggest corporate crisis the brand’s had in 70 years – or ever had – we’ve probably got a pretty good chance of achieving it.

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